BRUTON ASSURES SAVERS HERE WILL NOT FACE BANK TAX - Deposit account holders need not fear a Cyprus-style tax on their savings, according to Enterprise Minister Richard Bruton. Mr Bruton said the detail of the EU’s bailout of Cyprus would be designed to avoid contagion elsewhere in the euro-region, writes the Irish Examiner. Initially Cypriot resident and non-residents were to be levied 6.75% on bank savings of less than €100,000, and 9.9% above that benchmark. With rates in flux, these levies could move to 3.5% and 12.5% respectively. “Junior bondholders are clearly in the firing line in this case,” Mr Bruton said yesterday. “The deal has yet to go to the Cypriot parliament. There is an indication of flexibility in relation to the deal, but the detail has yet to be finalised. “There are different models in different countries. In Ireland, the original bank guarantee gave a blanket protection. We had €64 billion in recapitalisation of the banks, which has a knock-on for citizens, as we know only too well. We had the debate over what burden should bondholders carry. “We now have full protection for everyone up to €100,000. Where the cost [for Cypus] has to be shared out, a lot of thought has gone into balancing that to make sure there is a fairer [burden] sharing than occurred in the Irish case.” Mr Bruton said Ireland will not change its corporate tax rate, even though Cyprus is expected to increase its rate as part of the bailout. He said Ireland’s export-led recovery required that a low corporate tax rate be maintained.
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PAY CUTS NOT PART OF BANK OF IRELAND PLAN TO REDUCE COSTS - Staff at Bank of Ireland have been told that pay cuts are not planned as part of the 6 to 10% reduction in total costs that the Government has directed the company to implement. Instead the bank is focusing its efforts on resolving its €1.2 billion deficit in its pension scheme, reports the Irish Times. This could involve staff having to accept reduced benefits and/or increasing their contributions to the scheme from the current level of 2.5%. Bank of Ireland has already begun “engagement” with staff on the pensions issue. This comes just two years after agreeing a number of significant changes to the scheme with employees. The bank’s employee remuneration bill will also be reduced through a voluntary severance programme that is currently available to staff. Bank of Ireland has declined to state how many staff it expects to leave under the current scheme but 1,200 departed in the second half of 2012. This brought to 5,000 the number of staff who have left the bank since 2008, and left its headcount at 12,000 at the end of December. It has set aside €57 million for extra redundancies in 2013. The Government’s direction followed the publication last week of a Mercer review on bankers’ pay.
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PROFITS AT 'HIGHEST PUB' JOHNNY FOX'S HIT A RECORD €334,916 - Profits at one of the best-known pubs in the country, Johnny Fox's in the Dublin mountains, scaled new heights last year to a record €334,916. Revenues at "the highest pub in Ireland" increased by 10% in the year ending March 2012, writes the Irish Independent. Pub owner Tony McMahon said: "Business went very well last year here and we expect a 20% increase this year with The Gathering. We are very happy with how the business is going." Revenues hit €4.18m from €3.81m recorded 12 months previously. Net profits increased by €386,110 on a loss of €51,194 recorded by the pub in 2011. Mr McMahon says the pub has provided hospitality to seven heads of state and six prime ministers, along with celebrities including Brad Pitt and Angelina Jolie. The publican - who has owned the business for the past 26 years - said author and former Beirut hostage Brian Keenan enjoyed his first pint in Ireland at Johnny Fox's after his release.
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LEGO TO BUILD ITS FIRST FACTORY IN ASIA - Lego is to build its first factory in Asia as the toymaker taps into surging demand in the region and continues its push to add production in low-cost countries, writes the Financial Times. The Danish maker of toy bricks will start building a factory in Jiaxing, China, next year. When the factory opens in 2017 it will only supply parts to Asia, which is set to become the world’s biggest market for toys. The plant is expected to meet 70-80% of total regional demand for Lego. Lego’s sales have almost tripled since 2007, making it the world’s second-largest toymaker by revenues behind Mattel. Asia has played a big part in its success, as its annual sales increase by more than 50% in recent years. It is also highly profitable, with net profits last year of about $1 billion and a gross profit margin of 71%. Jiaxing is located around 100km from Shanghai, where Lego is planning to build a regional distribution centre for Asia. Its Chinese factory will follow plants in Hungary, the Czech Republic and Mexico as the group diversifies away from its roots in central Denmark in the countryside town of Billund. The plant will employ about 2,000 workers once it is fully operational in 2017 and Lego will invest more than €100m to build it.
